Arctic/Offshore Patrol Ship AOPS

[AlexanderM]

And given the fact that we will be using existing designs, it should minimize design requirements, not make them more expensive!

 

[Kirkhill]

This from the Halifax Shipping News.

The way that I read this is that Irving received 9 MCAD in July to prepare a proposal (Cost usually borne by vendor in my world)

They have since then managed to break the pre-Implementation design phase into 7 separate tasks which, if all authorized, will cost the public purse 288 MCAD.

At this time only two tasks have been authorized at a cost of 136 MCAD, presumably the first two.

The first two tasks are:

1 Project Management of the Design Phase
2 Engineering Design Phase 1

The remaining tasks are:

3 Engineering Design Phase 2
4 Engineering Design Phase 3
5 Project Implementation Proposal Development
6 Test Production Module
7 Long Lead Time Items

Reading the text I see no difference amongst items 2,3 and 4.  They appear to be simple iterations of the same task.  Prepping for implementation.

Item 5:  Why prep a proposal?  They have the contract and after three iterations they should be able to organize a plan, not just a proposal.

Item 6:  Tacit acknowledgement that "we've never done this before, we need to train our welders, fitters, supervisors, contractors and engineers how to work together".

Item 7:  Makes sense.

Item 1:  136 MCAD just to manage the "design" phase and perform 12 MCAD of engineering (RC's estimate) is one heck of a hefty management package.  Nova Scotia's going to get its 200 MCAD in yard loans back from the Fed's in jig time at that rate.  Or it should.

Your comments RC?

Contracts Signed for Final AOPS Design

The Honourable Rona Ambrose, Minister of Public Works and Government Services and Minister for Status of Women, along with the Honourable Peter MacKay, Minister of National Defence, and the Honourable Kerry-Lynne D. Findlay, Associate Minister of National Defence, today welcomed the signing of the definition contract with Irving Shipbuilding Inc. for the Arctic/Offshore patrol ships project through the National Shipbuilding Procurement Strategy (NSPS) at an announcement at halifax Shipyards.

This is the next contract signed after the ancillary one announced in July 2012 and it will be followed by a construction contract in 2015. This definition contract is a task-based contract divided into seven work packages (or tasks) that could be awarded. With this contract, Irving Shipbuilding Inc. will refine and complete the Arctic/Offshore patrol ships design to production level prior to construction in 2015. The total potential value of the contract is an estimated $288 million and it will support up to 200 jobs.

Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin.  At the same time, work will begin on improving and upgrading the Irving Shipyard to begin full ship construction in 2015.

During the initial discussions regarding the Navy’s Arctic/Offshore patrol ships, Canada and Irving Shipbuilding Inc. agreed that the first contract should be a smaller preliminary contract, followed by a larger definition contract to complete the Arctic/Offshore patrol ships design to production level, and subsequently an implementation contract to build and deliver the ships.

This “design-then-build” approach will mitigate both technical and cost risks by reducing unknowns, and therefore risks, for the building phase. Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin immediately. This approach is also aligned with the NSPS, which is built upon a more collaborative and risk-sharing relationship.

On July 10, 2012, the Government announced the awarding of a $9.3-million (HST included) preliminary contract to Irving Shipbuilding Inc. Within this preliminary contract, Irving Shipbuilding Inc. reviewed the existing Canadian-developed Arctic/Offshore patrol ships design and specifications, prepared an execution strategy and delivered a proposal detailing the scope and cost of the subsequent definition contract.

Finally, on March 7, a definition contract with Irving Shipbuilding Inc. was signed. The total potential value of the contract is an estimated $288 million (taxes included). The definition contract is a task-based contract divided into seven work packages (or tasks) that could be awarded. The first two tasks have been authorized and their total value is approximately $136 million.
The definition contract will last 30 months and we are on track to start cutting steel in 2015.

The Arctic/Offshore patrol ships will be used by National Defence to conduct armed seaborne surveillance in Canada’s economic exclusion zone, including in the Arctic.

The definition contract signed with Irving Shipbuilding Inc. is a task-based contract divided into the following seven work packages (or tasks) that could be awarded. With this contract, Irving Shipbuilding Inc. will refine and complete the Arctic/Offshore patrol ships design to production level prior to construction in 2015.

Project Management – This task will include all work required to ensure effective planning, management, execution, monitoring and control, and reporting of the definition contract work.

Engineering Design Phase 1 – This task will include the system engineering activities, integrated logistical support analysis and supplier engagement activities that are necessary to demonstrate that the preliminary Arctic/Offshore patrol ship design meets all of the contract design specification requirements with acceptable risk and within the cost and schedule constraints.

Engineering Design Phase 2 – This task will include the system engineering activities, integrated logistical support analysis and supplier engagement activities that are necessary to demonstrate that the Arctic/Offshore patrol ship design is a complete and integrated solution that meets all the contract design specification requirements with acceptable risk and within the cost and schedule constraints.

Engineering Design Phase 3 – This task will include the system engineering activities, integrated logistic support analysis and supplier engagement activities that are necessary to demonstrate that the Arctic/Offshore patrol ship design is a complete and integrated solution that meets all of the contract design specification requirements and is ready for the start of vessel construction.

Project Implementation Proposal Development – This task will encompass all the procurement, engineering, production and estimating activities required to develop the detailed project implementation proposal, including the required plans and a substantive cost for the implementation contract.

Test Production Module – This task will include all the work required to establish and verify production processes and produce a test module prior to beginning vessel construction.

Long Lead Items Procurement – This task will encompass all of the procurement and supply chain activities required to procure long lead items, which must be purchased prior to the start of vessel construction.

Once completed, the definition contract will enable Irving Shipbuilding Inc. to know exactly what to build and how to build it. It will ensure that once the build contract is signed, construction of the ships will begin.

 

[Colin Parkinson]

It stands to reason the first ships out of the both the east and west coasts will be over budget, late and need fixing. Hopefully the 2nd ships will show marked improvement on all 3 fronts, followed by a steady decline of those 3 issues.

 

[RC]

I would like to comment Kirkhill, but I don't even know what to say.  I guess we need to pay Irving to learn to build a ship and Odense (container ship designers) to learn to design an OPV.  It's ridiculous.

The mockery has already begun:

http://www.coltoncompany.com/

 

[RC]

Btw, Tim is not at all a fan of NSPS, and I disagree with his stance (I find it a bit hypocritical given how stringently he defends the Jones Act), but we are sure giving him fuel.

 

[AlexanderM]

I would like to comment Kirkhill, but I don't even know what to say.  I guess we need to pay Irving to learn to build a ship and Odense (container ship designers) to learn to design an OPV.  It's ridiculous.

The mockery has already begun:

http://www.coltoncompany.com/

What about the comment in the article that much of the money will go to Odense Maritime Technology?  I'm under the impression that they were involved in getting the Dutch frigates built at such a good price.  It might be a good thing to have them very much involved, perhaps telling Irving, here's how your going to do things, to keep costs in line.  This is probably just wishful thinking on my part.

 

[RC]

What about the comment in the article that much of the money will go to Odense Maritime Technology?  I'm under the impression that they were involved in getting the Dutch frigates built at such a good price.  It might be a good thing to have them very much involved, perhaps telling Irving, here's how your going to do things, to keep costs in line.  This is probably just wishful thinking on my part.

*Danish frigates

If I was Irving, I'd be a bit wary of taking advice on cost savings measures from ex-members of a shipyard that went out of business.  The Danish frigates were the last thing they ever built.  The vast majority of what they built were tankers, bulkers, and containerships.  It seems both coasts have adopted them, but I still don't see any way in which they could justify this budget for AOPS.

Anyone know what happened with Irving and Bath Ironworks?  Did they run up on the rocky shoals of ITAR restrictions?  BIW has to be the most expensive consultant they could possibly have found in North America.  My theory is that they shopped around for the highest design cost possible to maximize their profits.  Clever move given that profits are fixed.

I'm also wondering how in the world Irving is going to meet IRB requirements if they are sending a large chunk of this work to OMT.  They are required to meet 100% IRB obligations.  I think there will be a few people with things to say if they try to claim an exemption from IRBs for this contract.

 

[Oldgateboatdriver]

Yet, interestingly enough, if one looks at Bath Iron Works releases for the Zumwalt destroyers, you can see that for the detailed engineering phase, including a major re-design asked for by the Navy, they got about $100M US.

The Zumwalt's are a radical departure from previous USN designs and power plant configuration and are probably one of the most complex ship ever designed for the Navy. Irving, on the other hand, is basically asked to design a standard civilian light icebreaker, with limited armament and  limited specific military extra gear of a type that already exists and which Irving itself has built in the past (such as the light gun and the "bear trap").

 

[AlexanderM]

*Danish frigates

If I was Irving, I'd be a bit wary of taking advice on cost savings measures from ex-members of a shipyard that went out of business.  The Danish frigates were the last thing they ever built.  The vast majority of what they built were tankers, bulkers, and containerships.  It seems both coasts have adopted them, but I still don't see any way in which they could justify this budget for AOPS.

Anyone know what happened with Irving and Bath Ironworks?  Did they run up on the rocky shoals of ITAR restrictions?  BIW has to be the most expensive consultant they could possibly have found in North America.  My theory is that they shopped around for the highest design cost possible to maximize their profits.  Clever move given that profits are fixed.

I'm also wondering how in the world Irving is going to meet IRB requirements if they are sending a large chunk of this work to OMT.  They are required to meet 100% IRB obligations.  I think there will be a few people with things to say if they try to claim an exemption from IRBs for this contract.

A while back, I read in an article, that I can no longer find, that the Danish frigates were so cheap because commercial construction, rather than military construction, was used.  I wish I could find the article so I could provide a source.  It was written prior to the launch of any of the hulls.  I was thinking that for 4 times the price, we could upgrade them to military standards, using HSLA 80 or 100 steel.  The cost of the weapon systems should be about the same, so the only variance would be in the construction of the hulls.

 

[AlexanderM]

OK, so I just found the article, states that the Frigates were built to commercial specifications.  Also, the stated cost does not seem to include the weapon systems, so I'm wondering what the total cost was.

http://www.nxtbook.com/nxtbooks/aw/dti0708/index.php?startid=28

 

[The Bread Guy]

.... a new report calling for the cancellation of the AOPS work and, instead, going for "6 to 8 purpose-built high-speed offshore patrol ships based on a proven design" - here's the news release ....

A new report examining the government’s plans to build Arctic/Offshore Patrol Ships has just been released by the Rideau Institute and the Canadian Centre for Policy Alternatives.

Titanic Blunder: Arctic/Offshore Patrol Ships on course for disaster was written by University of British Columbia political science professor Michael Byers, and Stewart Webb, visiting research fellow at the Rideau Institute and research associate at the Salt Spring Forum.

The procurement of six to eight Arctic/Offshore Patrol Ships was announced in 2007 with a budget of $3.1 billion, with an additional $4.3 billion for operations and maintenance over a projected 25-year lifespan.

The report’s main findings include:

- The A/OPS are compromise vessels that will be ineffective in the Arctic and too slow and unstable for offshore patrol functions along the Atlantic and Pacific coasts.
- The A/OPS will cost 8 to 10 times per vessel what Australia and the United States are paying for purpose-built high-speed patrol ships.
- Further compromises can be expected, as the Department of National Defence struggles, within a budget that was set in 2007, to complete the procurement of vessels that are based on an entirely new design.
The report makes the following recommendations:

-Cancel the procurement of Naval Arctic/Offshore Patrol Ships.
-Commission 6 to 8 purpose-built high-speed offshore patrol ships based on a proven design.
-Rebuild the Coast Guard icebreaker fleet taking into account changing ice conditions and the need for the vessels to fulfill an additional, constabulary role ....

.... and here's a link to the 50 page report

 

[AlexanderM]

Hamiltongs, if you read the above post, the $3.1 billion is budgeted from the building program only, then the additional $4.3 billion for operations and maintenance over 25 years is budgeted from somewhere else.  They obviously do have both sides accounted for, but the $35 billion ship building budget is the aquisition cost side only. The rest will be there but accounted for somewhere else.

 

[Monsoon]

Hamiltongs, if you read the above post, the $3.1 billion is budgeted from the building program only, then the additional $4.3 billion for operations and maintenance over 25 years is budgeted from somewhere else.  They obviously do have both sides accounted for, but the $35 billion ship building budget is the aquisition cost side only. The rest will be there but accounted for somewhere else.

When you're right, you're right (I normally wouldn't trust anything with Michael Byers' name attached to it, but he reference to the figures is a PMO backgrounder on the subject).

 

[AlexanderM]

When you're right, you're right (I normally wouldn't trust anything with Michael Byers' name attached to it, but he reference to the figures is a PMO backgrounder on the subject).

OK, so when we consider just the AOP's, the ships are based on the Svalbard class which cost around $100 million to build and have the bofors 57mm.  So, 6-8 of these would cost Norway approximately $600-800 million, yet our budget is $3.1 billion and we just paid $288 million just for design, which would be half the budget for 6 ships if Norway was building them.  The costs just seem way, way out of whack. 

Please understand, I want our sailors to have the very best, I'm just frustrated by these crazy quotes in comparison with other existing ships, same with the destroyers.  And we hear talk of reducing numbers or capability because of cost, when our budget should be more than adequate.  It just doesn't make any sense to me.  But it's not because I have some agenda, other than getting the best for our sailors.  Cheers.

https://en.wikipedia.org/wiki/NoCGV_Svalbard

 

[The Bread Guy]

Coincidentally, CF/DND has issued a news release with no discernable "news" in it ....

In procuring the Arctic/Offshore Patrol Ships the Government of Canada is acting to meet established Royal Canadian Navy requirements. These requirements are guided by a recognition of new and evolving threats to the sovereignty of Canada’s domestic coast line and commercial shipping lanes. As northern waters become more navigable, there is a need for the Royal Canadian Navy to have greater capabilities for supporting search and rescue and other domestic operations in the Arctic.

“The strategy for procuring these new ships, the National Shipbuilding Procurement Strategy, was established and is being implemented through extensive consultations with the marine industry and with consistent third party monitoring,” said the Honourable Rona Ambrose, Minister of Public Works and Government Services Canada and Minister for Status of Women.

“Our government's commitment to build these ships in Canada should create 15 000 jobs and over $2 billion in annual economic benefits over 30 years," said the Honourable Peter MacKay, Minister of National Defence. "The strategy set forth by our government ensures that the Navy and Coast Guard have the ships they need to keep Canada safe while also revitalizing an important industry."

“Our Government is committed to providing our Canadian Armed Forces with the equipment they need to conduct their missions," said the Honourable Kerry-Lynne D. Findlay, Q.C., Associate Minister of National Defence and Member of Parliament for Delta-Richmond East. "I am confident the Arctic/Offshore Patrol Ships will give the Navy an unprecedented capability to operate in arctic ice conditions and enable them to have persistent northern presence during the arctic navigable season."

Last month, the Government of Canada awarded Irving Shipbuilding Inc. a contract, with a maximum value of $288 million, to complete the Canadian-developed, preliminary design for the Arctic/Offshore Patrol Ships. This detailed and complex work is underway and progressing well. Refined cost estimates and construction schedules will, in due course, be informed by this completed design.

The Arctic/Offshore Patrol Ships will give the Royal Canadian Navy an unprecedented capability, to operate in the ice, in both the low Arctic and high Arctic, and to have a persistent Arctic presence during the navigable season. This will bolster the Government of Canada’s ability to deliver on its commitment to protecting and promoting Canada’s Arctic sovereignty on behalf of all Canadians, for generations to come. The Government of Canada has made Canada’s North a cornerstone of its agenda, and the Arctic/Offshore Patrol Ship project activities are aligned in support of this priority.

 

[Navy_Pete]

Wow, the Svalbard class looks like it's a great ship.  Have had the opportunity to see a few of the various Norwegian, Danish and other viking descendents  ships and was hugely impressed, both from and engineering nerd side and from their normal operations.  I think if we ended up with something similar our sailors would be happy.  (As an aside, they are also a lot of fun during port visits to go run ashore with)

With regards to the previous posting on the design phases, the resign why there are numerous design phases is because it'll be done using a similar process to this;

http://en.Wikipedia.org/wiki/Spiral_model

So the first round is the napkin sketch; the next one is the roughly dimensioned and fitted one once equipment is picked, and the last is the final blueprinting.

Bit more complicated then that, but that's the gist.  The reason why that is used is that there are a lot of inter relationships between major systems, and the way you go with one will affect one of the others.  For example, hull form/size will drive the power requirement, power requirement will drive the sizing of the propulsion plant, type of propulsion plant will affect the hull form (ie azipods vs shaft driven).... so you have to do it all iteratively.

 

[Monsoon]

OK, so when we consider just the AOP's, the ships are based on the Svalbard class which cost around $100 million to build and have the bofors 57mm.  So, 6-8 of these would cost Norway approximately $600-800 million, yet our budget is $3.1 billion and we just paid $288 million just for design, which would be half the budget for 6 ships if Norway was building them.  The costs just seem way, way out of whack. 

Please understand, I want our sailors to have the very best, I'm just frustrated by these crazy quotes in comparison with other existing ships, same with the destroyers.  And we hear talk of reducing numbers or capability because of cost, when our budget should be more than adequate.  It just doesn't make any sense to me.  But it's not because I have some agenda, other than getting the best for our sailors.  Cheers.

https://en.wikipedia.org/wiki/NoCGV_Svalbard

My suspicion is that we're still comparing apples and footballs. According to this article (http://www.eurofound.europa.eu/eiro/2000/01/feature/no0001175f.htm), the Norwegian government paid a subsidy to shipyards worth about USD$400M per year in 1999. It also notes that the subsidy fell in 2000 due to new OECD regulations, but that the old direct subsidy was substituted with various indirect subsidies. Norway is not a big country, and USD$400M every year in return for no ships at all strikes me as an expensive way to secure an OPV cheaply when you do eventually buy one. At $100M for a one-off vessel, it wouldn't surprise me if the yard agreed not to charge anything for design as part of the subsidy deal, but I don't have any details on how that cost broke down and it doesn't seem like any are available.

Also, Svalbard is a Coast Guard vessel, so it's almost certainly built to civilian spec. All we know is that Langsten (now STX) handed over the vessel to the Coast Guard at a cost of $100M; we don't know if that included C2 system integration, commissioning, etc, which may well have been done by third parties or the CG itself. Again - I'm not saying that's what happened, I'm saying we don't and can't know.

What we do know, and what's been made very clear by gov't communications on the NSPS, is that the programme is partially intended to support (one might say "subsidize") Canadian shipbuilding so that it can provide service to the RCN and CCG when needed. Regardless of what we may feel about that, it's official policy and it's what pretty much every developed country in the world does. It appears that the federal government is essentially paying that subsidy in the form of buying expensive ships, rather than in the form of no-strings-attached cash like Norway.

On the subject of the expensive design phase awarded to Irving, a friend who was present at a recent NSPS-focused industry conference out west (he works for part of one of the losing consortiums) said that the consensus seems to be that the gov't recognizes that while Irving got the big contract, they got slightly hosed in that the ships they were awarded (RCN, vice CCG) aren't going to start building for years. Thus, the big design phase contract is intended to provide a bit of upfront subsidy, but since it's coming out of the same total acquisition cost, it's really just a matter of "when" the money is paid and won't alter the final cost. And it appears that it will be a bottom-up redesign, apparently at the department's request.

 

[AlexanderM]

OK, that's all good to know. Thanks.

 

[Kirkhill]

My suspicion is that we're still comparing apples and footballs. According to this article (http://www.eurofound.europa.eu/eiro/2000/01/feature/no0001175f.htm), the Norwegian government paid a subsidy to shipyards worth about USD$400M per year in 1999. It also notes that the subsidy fell in 2000 due to new OECD regulations, but that the old direct subsidy was substituted with various indirect subsidies. Norway is not a big country, and USD$400M every year in return for no ships at all strikes me as an expensive way to secure an OPV cheaply when you do eventually buy one. At $100M for a one-off vessel, it wouldn't surprise me if the yard agreed not to charge anything for design as part of the subsidy deal, but I don't have any details on how that cost broke down and it doesn't seem like any are available.

Also, Svalbard is a Coast Guard vessel, so it's almost certainly built to civilian spec. All we know is that Langsten (now STX) handed over the vessel to the Coast Guard at a cost of $100M; we don't know if that included C2 system integration, commissioning, etc, which may well have been done by third parties or the CG itself. Again - I'm not saying that's what happened, I'm saying we don't and can't know.

What we do know, and what's been made very clear by gov't communications on the NSPS, is that the programme is partially intended to support (one might say "subsidize") Canadian shipbuilding so that it can provide service to the RCN and CCG when needed. Regardless of what we may feel about that, it's official policy and it's what pretty much every developed country in the world does. It appears that the federal government is essentially paying that subsidy in the form of buying expensive ships, rather than in the form of no-strings-attached cash like Norway.

On the subject of the expensive design phase awarded to Irving, a friend who was present at a recent NSPS-focused industry conference out west (he works for part of one of the losing consortiums) said that the consensus seems to be that the gov't recognizes that while Irving got the big contract, they got slightly hosed in that the ships they were awarded (RCN, vice CCG) aren't going to start building for years. Thus, the big design phase contract is intended to provide a bit of upfront subsidy, but since it's coming out of the same total acquisition cost, it's really just a matter of "when" the money is paid and won't alter the final cost. And it appears that it will be a bottom-up redesign, apparently at the department's request.

Hamiltongs:

When you are right you are right. 

There is the cost of maintaining the shipbuilding capability and there is the cost of building the ship.  And the Europeans do subsidize their strategic assets.  It shouldn't surprise me that they distribute costs over three or four sets of books.  We're in the process of building a capability that they already have.

The thing is, if this is a national asset then it should be more broadly funded (ie funded with HRDC labour grants, IRAP grants, Industry Canada grants, DFAIT grants for export assistance). That would put the Canadian yards on par with the Euro yards.

The RCN would then get the vessels at production cost (just like the F-35s we're supposed to get) with the yards and the government carrying the overhead costs.

If that plan doesn't work for Canada's accountants and those costs have to be borne by the RCN and Coast Guard in their entirety (which in effect means you might as well make the yards departments of the RCN and Coast Guard) then the government should be very clear in demonstrating those cost differences to the public.

With respect to the Svalbard.  She was built to civilian standards.

 

[AlexanderM]

I'm OK with overpaying for the ships right up until the point that we have to cut back on numbers or capability and that's the line where we are overpaying by too much.